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With popular diets that limit bread and baked goods still going strong, you’d think that in-store bakeries would be hit hard. In fact, quite the opposite is happening: bakeries continue to be a key driver of grocery store sales, with many shoppers expressing a positive emotional connection to bread and baked goods, according to recent findings from the 2019 Power of Bakery Report jointly released by the American Bakers Association (ABA) and Food Marketing Institute (FMI).
According to the report, total bread and baked goods sales surpassed $59 billion in 2018, split between the fresh bakery department and items located in the grocery, frozen and dairy departments. In-store bakery sales were $13.8 billion and are dominated by desserts, sweet goods, and cookies, whereas center-store sales are more evenly balanced between functional and indulgent items.
Gluten-free is hitting a high, with 81 percent of survey respondents reporting that they sell gluten-free products—up from 68 percent last year. The number of stores carrying nut-free and egg-free products also saw significant increases. However, it’s worth noting that while more retailers are offering “free-from” products, only 11 percent of sales came from those products, down from 16 percent last year.
When seeking answers as to why sales of traditional sweets would be increasing during a period where healthy eating is dominating the headlines, it’s important to look at the emotional connection people have with bakeries and baked goods and the reasons they make their purchases. The Power of Bakery survey asked respondents what comes to mind when they hear “bakery,” and the associations are positive, such as “yummy” or even “love.” Whether it’s a doughnut, tart, or pastry, the buyer equates baked goods with special occasions and the occasional splurge.
To get a bigger piece of the general bakery pie, the report identifies opportunities for retailers to build traffic and sales, FMI’s Vice President, Fresh, Industry Relations Rick Stein says. “For instance, although 74 percent of shoppers typically buy functional bakery items at their main supermarket, conversion is lower for in-store bakery items like indulgent baked goods, desserts, and special occasion products. This opens the door for stores to emphasize their bakery as a destination for treats and special events.”
Progressive Grocer’s 2019 Retail Bakery Review has similar findings, stressing that supermarkets have the opportunity to become an indulgence destination where people can treat themselves, providing your offerings meet their needs, i.e., quality made, fresh products shoppers deem “worth the calories.”